Business Directories

Four major Saudi banks post sturdy Q2 profits

Riyadh, July 11, 2011

Four major Saudi banks reported quarterly profits that met or beat analysts estimates on Monday, in a sign the kingdom's lenders have begun to rebound from a punishing bout of a bad loan provisioning.

Al-Rajhi Bank , the country's biggest Islamic lender, posted a 3.6 percent rise in second-quarter profit. The bank credited higher special commissions, or net interest income, and banking fees income and a decline in expenses for the rise in profits.

Al-Rajhi had net profit of 1.84 billion riyals ($491 million) in the three months to end-June, compared with 1.78 billion riyals in the prior-year period. Analysts had forecast average quarterly profit to be flat at 1.78 billion riyals.

Al-Rajhi Bank said its board recommended a dividend of 1.25 riyals for the first half of 2011.

Meanwhile, Riyad Bank's profits surged 9 per cent to 836 million riyals in the second quarter, up from 766 million last year, topping forecasts for profit of 789.86 million riyals.

"Riyad Bank blew away estimates -- if this sparks a (market) rally tomorrow, it will negate the seasonality affect," said a Riyadh-based fund manager, who asked not to be identified.

"People are a lot more confident on banks, they will see better buyers now."

A massive Saudi government spending plan announced during the peak of regional unrest, which includes building 500,000 new homes, has helped lift sentiment in the kingdom's banks.

Hollandi's operational profit for the second-quarter climbed 3.4 percent to 495.2 million riyals.

Bucking the upward trend, Samba Financial Group posted a 9.7 percent drop on profits but still met estimates. The country's second-largest lender by market value blamed lower special commissions income for the decline in quarterly profit.

Samba reported net profit 1.102 billion riyals for the period ended June 30, compared with 1.22 billion riyals a year earlier. Analysts had forecast an average profit of 1.11 billion riyals, according to a Reuters survey. - Reuters